What are the processing fees and charges associated with home loans?

As a home loan agent, you should know that lenders charge administration fees when processing home loan applications. This is because there are significant expenses involved, such as credit score check, to execute the loan. Processing fees range between 0.5% and 2.50% of the overall loan amount taken, depending on the bank or financial institution. The borrower will also have to pay 18% GST on this service, which entails sanctioning and managing the home loan.

The fees are charged one-time, non-refundable and paid above EMIs. While some lenders waive off these fees on special occasions, some banks levy separate charges for salaried and self-employed people. 

Know the different processing fees as a home loan agent

Your role as a home loan agent entails being aware of the product inside out. Take a look at the latest home loan processing fees as charged by banks in 2023:

*Disclaimer: The data may be subject to change. Please refer to the lender’s website for confirmation.

Additional Reading: How to become a mortgage loan agent in India

Different types of fees and charges on home loans

As a home loan agent, it is imperative to know all the fees, charges and penalties associated with home loan so that you can help your clients if the need arises. Broadly, the fees and charges applicable are classified into three categories: Loan, Document and Legal. 

Loan related 

Login fee

Also known as Application or Administrative fee, this amount is charged by some lenders even before the home loan gets approved. However, the login fee will be deducted from the processing fee once the loan gets approved.

Conversion fee

Also known as Switch fee, this fee is applicable if the borrower wishes to convert their current floating rate loan to a revised one, or from fixed to floating rate or vice-versa. 

Repayment mode swap charge

If your client wishes to make any changes to their repayment dates or methods, as a home loan agent, you should inform them that the lender may charge this fee. 

Prepayment charge

This fee is applicable in case the loan is completely paid off before its tenure ends. Some lenders do not levy prepayment charges for floating loan rates and for individuals. Prepayment charge is also known as Preclosure or Foreclosure fee.

Partial prepayment charge

If a part of the fixed loan is prepaid, the bank may charge for partial prepayment. In this case, as a home loan agent, you can inform your borrower beforehand, so that they do not land up paying more. Some lenders also term this as Past prepayment or Part-payment fee.

Late payment fee

True to its name, this fee is levied when there is a delay in repaying EMIs. It is also known as the Penal Interest rate.

Recovery charge

This amount is charged if your lender has to take any action against its borrowers, or if the borrower defaults in paying EMIs. Some lenders call it Collection charge.

Document related

Stamping charge

Any legal document between the lender and the borrower needs to be signed on stamp paper. This charge includes the actual costs that have been incurred. 

NOC charge

This has to be paid to obtain a No Objection Certificate (NOC). Similarly, any duplicate copy or revalidation of the NOC will incur charges.

Agreement copy fee

A request for a copy of the loan agreement, then your client may have to pay the fee.

Issuance charge for photocopy of title documents

As a home loan agent, you will have to guide your borrower to submit their property’s Title documents as collateral. They will have to pay an issuance charge for a copy of the documents from your bank or financial institution. 

Statement charge

Also known as Statement of Account issuance fee, this is applied whenever your client requests for a duplicate statement of their home loan accounts with your DSA.

Amortization schedule issuance fee

Borrowers will be asked to pay a fee if they are looking for a detailed amortization schedule for the entire tenure of the loan.

Document retrieval charge

Lenders will levy this charge at the closure of the loan, when returning all the original documents of the home or property back from the borrower.

CIBIL report fee

This is applied when a borrower requests for a copy of CIBIL credit report.

Legal related

Legal fees

Home loan agreements need to be created and verified by a legal advisor or lawyer. All such expenses will have to be borne by the borrower.

Valuation/Inspection fee

The property that the borrower is buying and putting up as collateral will be inspected and valued legally. Your client may have to pay for this service. 

MoD charge

Memorandum of Deposit of Title Deed (MoD) confirms that the borrower is depositing their property’s title documents with the lender as collateral. The charges for this service vary in Indian states. 

CERSAI charge

A property is pledged with a lender after getting the pledge registered with Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI). The Indian registry levies this charge for rendering the service.

Other applicable fees

Apart from the above fees, some of the other charges you should know as a home loan agent include Document retrieval charges, Cheque bounce charges, Stamp duty and registration fees, Loan cancellation charges, etc. as processing fees.

Wrapping it up

As a home loan agent, make sure you read any loan agreement and Most Important Terms and Conditions (MITC) document to understand the fees and charges levied by your bank or financial institution. The above charges are applied to authorize and handle the loans.